Dive Brief:
- Grupo Mexico Transportes has completed its purchase of the Class II Florida East Coast Railway (FEC), which was originally announced in March 2017, according to a company press release.
- A Class I railroad, Grupo Mexico will soon begin operations in the Florida peninsula, where FEC's 351-mile stretch of rail originates. Grupo Mexico will now have access to a line linking Miami and Palm Beach with St. Augustine and Jacksonville, where it interchanges with Class I railways CSX and Norfolk Southern.
- FEC previously handled around 550,000 loads of freight per year with commodities including chemicals, metals, wood and automobiles. The Grupo Mexico purchase will help consolidate the presence of the Mexican railway in North America.
Dive Insight:
Grupo Mexico's purchase of FEC is either a testament to the value of connected, global supply chains, a bet on the resurgence of carload shipments, or both. Regardless, the Class II railroad seems a perfect acquisition for the Mexican conglomerate looking to improve access within the U.S.
Logistics Management reports the line recently also bought a Texas rail property, and the acquisition of FEC helps the group gain access to the valuable South Florida ports. In addition, the holdings group owns a 26% stake in Union Pacific. Certainly, diversifying its geographic access will help the railroad group offer greater options to their clients, which are likely primarily based in Mexico.
In addition, FEC provides Grupo Mexico the ability to manage Mexican material exports to the U.S. Supply Chain Dive previously reported a Grupo Mexico mining subsidiary, Southern Copper, exported $862,500 worth in minerals to the U.S. in 2015 alone. FEC, meanwhile, specializes in carload transport — a mode of transportation that was in decline over the past years, likely prompting FEC's sale, but appears to be poised for an upswing.
In short, the company's purchase of FEC shows a commitment to diversifying product services, both for its own companies and clients seeking to transport goods within, or export to the U.S.
